But now this rule has changed. Yes, the Central Board of Indirect Taxes and Customs (CBIC) said that GST will not be levied on the penalty imposed by banks and NBFCs. Penalty means that if you have violated any rule, then you have to pay extra money in such a case.

There is no GST on transactions up to Rs 2000

Apart from this, CBIC also clarified through a circular that GST will not be levied on transactions up to Rs 2,000 through payment aggregators on online platforms. CBIC clarified that GST will not be levied on the penalty amount. CBIC said that this decision has been taken as per the recommendation of the 55th GST Council. The GST Council includes representatives of the Central Government and all the State Governments.

When is the penalty imposed?

Penalty is imposed by banks and NBFCs when your loan EMI or credit card payment is late. This penalty is imposed when you are not able to pay the loan installment on time by not following the rules. In this situation, the bank imposes a penalty on the customer. Till now, the customer has to pay 18 percent GST on this penalty amount. This decision of CBIC will provide relief to both the bank and the customers.

What will be the benefit?

Experts say that this decision of CBIC is very important. This will also help in reducing disputes between banks and customers. Due to this decision, GST will not be levied on the fines imposed by banks. Both the bank and the customer will benefit from this in monetary terms.

There is also benefit on shopping of less than 2000 rupees

Apart from this, some people and companies complained that if a person buys something less than 2000 rupees through an online platform using a credit or debit card or any other card, then GST should not be levied on it. In view of these complaints, clarification was given on the matter by CBIC. Payment aggregators help e-commerce sites and merchants to take money from customers. These shops do not need to create any separate system themselves.

These companies collect money from customers. After this, they send it to the shopkeepers’ accounts at the scheduled time. CBIC has also mentioned the rules of RBI. These rules explain the difference between payment aggregators (PAs) and payment gateways. CBIC clarified that if a person makes a purchase of less than Rs 2000 on an online platform using a credit card, debit card or any other card, then GST will not be levied on it. This exemption will be available only to such payment aggregators (PA) who work under the rules of RBI.

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Having a nominee would have helped the banks in reducing the unclaimed amount. Keeping this in mind, the Reserve Bank of India (RBI) has issued a notification, which states that banks and NBFCs do not have the option of nominee for existing savings accounts. RBI asked the banks to name the nominee in the savings accounts and safety lockers of new and all existing customers.

Nominee not available in a large number of savings accounts

The central bank (RBI) said that no nominee has been appointed in a large number of accounts. The purpose of providing a nominee is to reduce the trouble of family members on the death of the depositor and to settle claims quickly. According to the notification of the central bank, based on the assessment of the Reserve Bank, it was found that nominees are not available in a large number of savings accounts. The central bank said, ‘To avoid inconvenience and difficulty to the family members of the deceased depositor, we insist on naming a nominee for all existing and new customers who have savings accounts, safe custody articles and safety lockers.’

Progress report will have to be updated on the portal every quarter

RBI said that the Customer Service Committee (CSC) of the Board of Directors should review the achievement of nomination coverage at a fixed period. The progress report in this regard should be given on the Reserve Bank’s Daksh portal on a quarterly basis starting from March 31, 2025. The notification also said that in addition, the frontline staff in the branch can be suitably trained to receive the nominee as well as to properly settle the claims of the deceased constituents and deal with the nominees / legal heirs.

RBI said that the account opening form may be suitably modified (if not done so earlier) to provide for customers to avail or opt out of the nominee facility. Apart from informing the customers directly, the concerned banks and NBFCs have also been asked to publicise the benefits of using the nominee facility through various media, including launching campaigns from time to time to achieve full coverage of all eligible customer accounts.

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As such, the above companies shall not transact the business of a Non-Banking
Financial Institution, as defined in clause (a) of Section 45-I of the RBI Act, 1934.

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The central bank gave this information. Hyderabad-based Star Finserv India was providing services under ‘Progcap’ (owned and operated by Desiderata Impact Ventures Private Limited). Mumbai-headquartered Polytex India was providing services under the ‘Z2P’ mobile application (owned and operated by Zytech Technologies Private Limited).

Why did RBI cancel the license

Giving reasons for cancellation of Star Finserv’s Certificate of Registration (COR), the Reserve Bank said that the company has violated the Code of Conduct Guidelines in Outsourcing Financial Services in its Digital Lending Operations by outsourcing its key decision-making functions, such as loan appraisal, loan approval as well as KYC verification process to the service provider. The Reserve Bank said that Star Finserv has violated the Reserve Bank’s guidelines on data privacy and security of customer information by providing full access to customer details to the service provider.

Polytex has violated the norms of Code of Conduct in Outsourcing of Financial Services by outsourcing its key decision making functions relating to KYC verification, credit appraisal, loan disbursement, loan recovery, follow up with borrowers and attending to and resolving borrower grievances.

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According to Bhasha news, banks and non-banking financial companies have been imposing penal charges on default in loan payments as a means of increasing revenue.

Banks will be able to impose only ‘reasonable’ default charges

According to the news, concerned about this trend of penalty charges, RBI had amended the norms on August 18 last year, under which banks or NBFCs will be able to levy only ‘reasonable’ default charges. Banks, NBFCs and other RBI regulated entities were given an extension of three months till April to implement these revised norms. In a set of frequently asked questions (FAQs), the RBI said that in case of existing loans also, these instructions will be applicable from April 1, 2024.

Penal fee has to be reasonable

The Reserve Bank of India has also said that the change in the new penalty fee system will be ensured on the renewal date coming by June. Regarding the August 2023 guidelines also being applicable in case of default in loan repayment, RBI has said that such default is a violation of important terms and conditions of the repayment agreement, hence penal charges can be imposed. But this penal charge can be imposed only on the defaulted amount and will have to be reasonable.

No good for those who deliberately default

IBA and NESL are working on such a system with the help of which loan defaulters can be declared defaulters in a fast track manner. The Bank will provide additional information to the Information Utility Services regarding loan accounts which have been identified as fraud. According to NESL data, default is highest in loans ranging from Rs 10 to Rs 100 crore in the country.

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Banks say that the new rules will affect the demand for consumer loan products. In the bankers’ meeting, a decision on increasing personal loan rates can be taken in a day or two. RBI has recently increased the risk weight of unsecured loans by 25 percent. With this step, the risk weight in case of consumer loans has increased to 125 percent.

This means that whereas earlier banks were required to maintain Rs 9 of capital for every Rs 100 of loans, now they will have to maintain Rs 11.25. At the same time, credit card loans for banks will have a risk weight of 150 percent, while receipts by NBFCs will have a risk weight of 125 percent, which was earlier 100 percent.

Impact on customers

The increase in risk weight simply means that banks will have to set aside more money as a buffer while giving personal loans. This will limit the ability of banks to give loans. Interest rates will remain high as demand for loans increases. In the current banking system, 83 percent of personal loans are given to existing customers of banks.

How much increase is possible

At present, different banks are charging interest ranging from 10 percent to 30 percent depending on the tenure on personal loans. It is believed that an increase of one to one and a half percent may be seen in this.

What do banks say

The immediate impact of the increased risk weight will be that banks will require additional capital, SBI economists said. We estimate that the banking industry will require additional capital of Rs 84,000 crore.

At the same time, credit rating agency S&P Global says that the Reserve Bank’s decision is likely to reduce the capital adequacy of banks by 0.6 percent. The agency says this will increase interest rates on loans, reduce credit growth and increase the need to raise capital for weak financial institutions.

At present, home loan, car loan and education loan will not be affected by this step of RBI. However, stricter loan norms may impact NBFCs more. They offer unsecured personal and consumer loans.

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The Reserve Bank on Thursday tightened personal loan rules for banks and non-banking financial companies (NBFCs). According to the revised criteria, the risk weights of financial institutions have been increased by 25 percentage points. It is believed that due to this move of the Central Bank, taking a personal loan may become expensive in the future.

This change will not apply to certain consumer loans including housing, education and vehicle loans. Apart from this, these rules will also not apply to loans secured by gold and gold jewellery. These loans will continue to have 100 percent risk weight. Higher risk weight means banks have to set aside more money as a buffer when it comes to unsecured personal loans. In simple terms, a high risk load restricts the lending capacity of banks.

RBI Governor advised banks and NBFCs to reduce risks

Recently RBI Governor Shaktikanta Das had flagged the high growth in certain components of consumer credit and asked banks and non-banking financial companies (NBFCs) to strengthen their internal monitoring mechanisms, mitigate risks and take appropriate safeguards in their own interest. Advice was given to establish the solution.

The RBI Governor also underlined the high growth seen in consumer credit and the increasing dependence of NBFCs on bank lending during his interactions with MDs/CEOs of major banks and large NBFCs in July and August. The Reserve Bank said in a circular, ‘After review, it has been decided to increase the risk weight by 25 per cent to 125 per cent in respect of consumer loans of commercial banks (outstanding and new) including personal loans but housing loans, education loans, This change will not be applicable to vehicle loans and loans secured by gold and gold jewellery.

The central bank has increased the risk weight on credit receipts for banks and NBFCs by 25 percentage points to 150 per cent and 125 per cent respectively. Fears are being expressed that due to this move of the Central Bank, personal loans of banks and NBFCs may become more expensive.

RBI bulletin said – Inflation has come down but the challenge is not over yet.
The Reserve Bank of India’s bulletin on Thursday said that retail inflation has moderated due to monetary policy steps and supply-side interventions, but the challenges are not over yet and we have miles to go. An article on the state of the economy in the November Bulletin also said the global economy is showing signs of slowing in the current quarter as manufacturing slows, while services sector activity has reached the end of its post-pandemic expansion .

The report said that tightening of financial conditions is a significant risk to the global outlook in the coming period. “The pace of change in GDP in India is expected to be higher on a quarterly basis in Q3:2023-24,” said the article written by a team led by RBI Deputy Governor Michael Debabrata Patra.

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Under this, from today i.e. June 1, financial companies will start offering as well as accepting green deposits. Such funds can be used for renewable energy, green transport and construction of green buildings. Explain that some regulated entities (RE) such as HDFC, IndusInd Bank, DBS Bank, Federal Bank and Central Bank of India are already offering green deposits for financing green activities and projects.

What is Green Deposit?

Green Deposit is a fixed term deposit for investors. Investors who want to invest their surplus funds in eco-friendly projects can invest in it. Green deposits are available for a specific purpose, which is not the case with other deposits. Apart from this, all the rules including maturity or redemption are the same for both.

According to RBI, financial institutions will extend the facility of green deposits in nine sectors, including the renewable energy sector. The other eight sectors include Energy Efficiency, Green Building, Clean Transportation, Sustainable Water and Waste Management, Pollution Prevention and Control, Sustainable Management of Living Natural Resources, Terrestrial and Aquatic Biodiversity Conservation and Land Use.

Why is it needed

Climate change is being seen as one of the most serious challenges in many countries around the world and many steps are being taken to reduce emissions and promote eco-friendly activities globally. Keeping this in mind, the RBI issued a framework on April 11 for banks to accept and promote green deposits.

In its framework, the RBI said, “The financial sector can play an important role in mobilizing and allocating resources for green activities and projects. The objective of this framework is to encourage REs to offer green deposits to customers and protect the interests of depositors.” To do.”

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